Government Spending In The 1970s

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Government spending in 1970 consisted of approximately 95 billion dollars in defense, 21 billion in welfare, 57 billion in education, 22 billion in healthcare, and 32 billion in pensions (US Government Spending 1970). Government spending for defense increased during the Vietnam War. However, when it concluded in the mid 1970’s, spending declined. This was a time of inflation and high unemployment. Created in 1970 was the Extended Benefits Program (Moody 's Analytics Buffet Blog). It provided assistance when there is high unemployment, which was seen in the 1970’s. In 1971, The Revenue Act of 1971 was put into effect. This Act increased the minimum standard deduction from 1,000 to 1,300. In the 1970’s and even the last 80 years, the government…show more content…
At the end of 1973, the unemployment rate was 4.8 percent. It spiked to 8.9 percent in middle of 1975. To help with the high unemployed and inflated economy, President Ford proposed a tax cut of approximately 16 billion dollars and wanted Congress to halt government spending. Congress did pass a tax cut of over 20 billion dollars, but increased spending on…show more content…
Government expenditure increased due to personal tax credits and more leniency towards applicants for unemployment compensation. Tax changes in the mid 1970’s benefitted the middle to lower income bracket by increasing their disposable income (A Tale of Two Tax Cuts, 2001). In the late 60’s and early 70’s, the US was in an inflationary gap. The Oil Crisis caused a shift to the left in the short-run aggregate supply. It then resulted in a recession. President Ford’s billion’s of dollars worth of tax cuts along with the extended benefits program increased the federal deficit of the US. The aggregate demand also increased. There were other tax acts during the 1970’s; however, they were trivial, and their economic impact was minor such as the Tax Reform Act of 1976 and the Tax Reduction and Simplification Act of 1977. The US Real GDP per capita kept decreasing every quarter of 1974. However, after the tax cuts, in 1975, Real GDP averaged over 4 percent (A Tale of Two Tax Cuts, 2001). Fiscal policies are seemingly non-existent in the 1970’s though as compared to other eras, such as the 2000’s. There wasn’t as much data on fiscal policy in the
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